SINGAPORE (Aug 7): Fraser and Neave, the beverage, dairies and publishing company, reported a 12.4% fall in 3Q18 earnings to $50.3 million from a year ago.
If $1.2 billion one-off recognition of fair value reserves in 3Q17 was included, 3Q18 earnings would have fallen 96%.
Revenue for 3Q18 ended June inched up 0.4% to $485 million from a year ago, driven by strong dairies sales and favourable translation effects, negated by weaker soft drinks sales.
Group 3Q18 profit before interest and taxation (PBIT) declined 3% to $72.4 million, impacted mainly by higher input costs and absence of dividend income from Vietnam Dairy Products Joint Stock Company or Vinamilk.
Dairies remained the group’s key contributor, especially Dairies Malaysia and Dairies Thailand where earnings grew 77% and 17%, respectively. Dairies quarterly earnings was further bolstered by Vinamilk’s $38.8 million earnings contribution, which benefitted from an additional half-month contribution as profit recognition under equity method started from April 16 2017.
Despite that, dairies 3Q18 earnings fell 7.7% to $73.6 million due to the absence of dividend income from Vinamilk this quarter. Excluding the dividend income of $33.4 million in 3Q17, earnings from dairies would have increased close to 59%.
Business conditions for beverages continued to be challenging especially in Malaysia where soft drinks sales were adversely impacted by slow off-take after the Hari Raya festive season and the postponement of purchases by customers in view of zero-rated GST which took effect from June 1.
Consequently, beverages revenue fell 5% to $133.8 million. Despite lower revenue, Beverages 3Q18 earnings grew 38% to $2.9 million due largely to lower sugar cost, reduced operating costs and favourable translation effects.
Publishing and printing recorded higher losses of $4.7 million compared to $2.7 million a year ago, largely attributed to lower print volume and timing of order deliveries.
In its outlook, F&N says contribution from Vinamilk is expected to increase as the group will equity account the results of the associate for the full 12 months in the new financial year.
While publishing will continue to invest in its digital business and overseas markets through its strength in the education content segment, F&N says it will ensure that the unit’s cost structure remains sustainable and explore opportunities to enter into new business segments.
F&N shares closed 2 cents lower at $1.96 on Tuesday.
